20 Million Chinese Migrants Out Of Work. More to Come.

Wednesday, December 3, 2008 15:17
Posted in category Uncategorized

The ripples of the global economic crisis are widening, and as these ripples have expanded they have impacted people on Wall Street, Main Street, and now on factory row.

In China, perhaps on a size and scale not possible elsewhere, the story of the impact on labor is coming to light.  There have been the more public scuffles surrounding toy factory closures and there have been stories of taxi drivers on strike that have made the international press.. but those stories were barely scratching the surface of just how severe the labor issue has become, and will be going forward.

The first ripples I began seeing were in the colleges as we began hearing several months ago that firms were simply not hiring, or that a single management training position was drawing 25,000+ resumes.  Some are turning to government jobs, but many that I spoke to this weekend at Fudan simply were looking to get entrance into graduate school or find something that would hold them over until firms began hiring again (GE, FedEx, TNT, PWC, and many others who absorb thousands are on 100% hiring freeze).

But perhaps more concerning were the reporting that migrants were returning home, to the tune of 20 million as reported by the recent China Daily article SMEs scouting for ways to remain in business.

What is interesting is that as firms like GM and Lehman downsize, and as the numbers in the west get worse, it is clear to me that whatever the worst case scenarios are for those markets… we have probably already seen worse here in the stock markets, real estate markets, and the labor markets.

Of course, when speaking/ writing to others who are trying to work this out, there are a few variables that I think still need to be more fully understood before we can definitively say what the root causes are behind the numbers:

1) Toy factories always come off in September, so what layoffs were unexpected vs. within historical averages
2) September/ October is harvest season, and some migrants may have been returning home to help with the harvest (usually return November, so follow up to this is how many returned or simply found other opportunities in other cities?).
3) There are stories that many in Sichuan returned home to take care of family issues that are related to the earthquake – one recent report puts that number at 1 million +
4) How many of these jobs are offering salaries that are too low still to attract labor, or are simply not high enough to retain labor?
5) How many of these people were the group who decided to return home to work closer to home in the first 6 months of the year? this was actually seen as a healthy macroeconomic phenomenon.

One thing is clear to me though, is that the global slowdown will have a bigger impact on the China economy

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7 Responses to “20 Million Chinese Migrants Out Of Work. More to Come.”

  1. OLI says:

    December 3rd, 2008 at 7:50 pm

    20 million ?? totally Out of context

  2. uln says:

    December 3rd, 2008 at 8:57 pm

    Hi, interesting post. I’ve been following what you write on the unemployment issue, and also writing a bit about it myself. It is going to be a key factor to determine the impact of the crisis in China.

    As far as I have seen, nobody really has a clue of how bad is the damage right now, or how bad it’s going to be in 09.

  3. Rich says:

    December 3rd, 2008 at 9:05 pm

    OLI

    I would agree that it is out of context, which is why I asked the 5 follow up questions. I am sure that a lot of people have lost their jobs, and I am sure some of it is due to financial crisis, but I am not sure how many are seasonal employed vs. real victims of the crisis.

    R

  4. Rich says:

    December 3rd, 2008 at 9:09 pm

    UNL (you aren’e also OLI as well are you?)

    Thanks for pointing out your site. I am not sure how bad it is going to get, but I am pretty sure it will get worse. this morning we were discussing the recent news about Long Beach backing up. Essentially, this is part of a vicious cycle as truckers sit idle they do not buy stuff, and as they do not buy stuff China does not need to produce stuff, and as china does not need to produce stuff China does not need to buy stuff (ram materials) or hire people, and so on… and this is just one chain.

    The question for me is whether or not the G20 will reconvene once Obama is in office and actually DO something that will address some of the real issues. Simply bailing out banks or other friends of the administration is not the answer,

    R

  5. James Wheeler says:

    December 4th, 2008 at 3:21 am

    Interesting post. I didn’t realize the effects of the economic crisis was hitting the Chinese job market so hard. The industry I work in (software outsourcing) has had some problems as a result of the crisis, but is still hiring.

  6. Uln says:

    December 4th, 2008 at 11:07 am

    Hi, I am not OLI, I am Uln from CHINAYOUREN.

    I just posted about the unemployment problem here:
    http://chinayouren.com/eng/2008/12/unemployment-the-missing-factor/

  7. Rich says:

    December 4th, 2008 at 11:43 pm

    James

    you are the first person I have heard from still hiring. Most of the firms I speak with are on across the board freezes.

    R